This purported curse could be the best slogan for what's going on in our business lives. The recession certainly has mixed things up, but we are also at a phase of the information age when we feel the wind mussing our hair as the speed of technological change redefines jobs, remakes careers, and drives pay practices. And if you've noticed the wind pick up, you may have realized that it's also transforming the work culture for employees and what we mean by customer service for consumers.
Why are we talking about this on Compensation Cafe? Because we have a chance to look at a case study about the entanglement of technology, job redefinition, evolving pay practices and social policy.
It involves the new start-up, Tanjarine, which would like to revolutionize your dining experience by giving you and your tablemates an interactive tablet that will let you drive your own ordering experience. As its Vice President of Product Marketing, Heidi Gibson, points out, the company's sweet spot is small- and medium-sized "family casual" restaurant chains.
The thing is, with a small bit of tweaking, this case study could apply to many other industries -- healthcare, life science, insurance, finance, engineering and so on -- that employ a combination of highly skilled specialists and hourly workers in support occupations. So Ann Bares and I thought this would be an interesting story to share.
Tanjarine is running lean and mean, with an in-house staff of about 30 backed up by a similar number of contractors. You can imagine that the market for Android tablet/games architects is steaming hot right now, and Heidi tells us that Tanjarine offers "generous salaries" and other forms of compensation while it struggles to find "quality people" to build its product offering up. So far, this business case should sound pretty familiar to many of you, even if the scale may be a bit off.
Restaurants run on a bleeding edge margin. (That might sound familiar, too.) Tanjarine's new product will help their target market of restaurants to move orders more quickly and give waitstaff more time to upsell and cross sell. Waitstaff will help to turn over the tables, growing income from tips. However, other forms of efficiency will deliver the classic goal of increased productivity -- flat staffing. Heidi, who is also a successful restauranteur, doesn't think staffing needs will be revolutionized, but there will be some impact.
And here's where things get more complicated. This unpopular bulletin board appeared in San Francisco recently.
by Paul Carr, Pandodaily
In November, San Francisco voters will be asked to approve raising the city's minimum wage in four increments until it reaches $15.00 an hour in 2018. This in a city that requires health care expenditures of businesses employing 20 or more. I suppose some would say the bulletin board is right. Many, many residents are offended. Business owners struggle. Employees cheer.
Heidi believes that the new minimum wage will become law and she's pretty sure that labor costs will increase 20% next year. This in a city where some owners have already shifted a portion of their income to cover labor costs. Faster table turnover will come in handy (as will the higher wages if you're trying to feed your kids).
In an article called, "Signs of things to come," The Economist notices with surprise in its prose, that "we are beginning to get a glimpse of the productivity potential of machine intelligence . . . it takes a high level of expertise and experience to advance the science of machine learning, but applying machine learning techniques . . . to new problems . . . is relatively straightforward." Take note: Changes in your company's operations are inevitable.
At the same time, 26 states have increased the minimum wage in the recent past. More will be added, helping our employees who are struggling mightily, but also challenging the status quo. Heidi worries that experienced waitstaff from outside San Francisco will trade a longer commute for higher pay and begin to eliminate opportunities for unskilled San Francisco residents. That would be a real challenge to the city's culture and highly unpopular.
This is a Compensation Cafe case study. Whether it's new news for you, or everyday stuff -- what do you think may be in store for your company or industry?
Margaret O'Hanlon, CCP is founder and Principal of re:Think Consulting. "Everything You Do (in Compensation) Is Communication" the much-awaited ebook is in prerelease! (Tell everyone, will ya.) Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, she was a Principal with Towers Watson.
Hi Margaret,
I also believe this will be one of the great challenges of our time. It is a very complex issue. Society has gone through major changes in how we work but the difference now is the speed of change. It is basic economics that at some point the cost benefit between employing people for some current jobs will change. The rapid advance of technology, acceptance, and falling prices for it will drive a change. This is meeting up with the debate on the growing wage disparity. We now live in a global workforce that is putting downward pressure on wages on the low end as it puts upward pressure on wages on the high end. Just look at all the freelance listing websites that make it easy to compare a graphic designer in the U.S. looking for $40/hr vs. a graphic designer in India looking for $8/hr to do the same work. When will autonomous cars have the ability to replace taxi and Uber drivers (why did Google invest)?
In Seattle we already passed a min wage hike to $15/hr. When will the economics drive more automation? It may take more national pay hike movement to really drive it.
In my opinion, the real focus needs to be on what the new social contract will be and how to retain the effected workforce for the next economy jobs.
Posted by: Trevor Norcross | 07/30/2014 at 12:39 PM
Now all we need are robots that will deliver the food to your table. Sad fact that waits-people (?) will lose their jobs eventually.
And if you check, you'll find these are the jobs that kids with college degrees are taking because they can't find work as a professional.
Posted by: Jacque Vilet | 07/30/2014 at 12:41 PM
Jacque, job extinction is not new. We just need to adapt and identify what's next. Maybe it will force more unexpected innovative jobs. Have you seen people who are making money creating "unpacking" videos? What are the other "jobs" that exist now that did not 5-10 years ago?
Posted by: Trevor Norcross | 07/30/2014 at 01:37 PM
Trevor, I agree that economics is not the only driver for the digital solutions are finding their way into our work lives. And I don't think that the lower-skilled jobs will be the only ones affected. But the new jobs that are spawned are not typically for the lower skilled.
If I could make a wish as the world keeps turning, it would be that US companies think longer and with a more strategic bent about outsourcing jobs overseas and limiting merit budgets -- at the same time that the executives are worrying about the future for their kids. It doesn't seem to make sense, even in terms of long term economics for US companies. And if it does, I don't see anyone articulating the case for anything but immediate savings.
Posted by: Margaret O'Hanlon | 07/30/2014 at 02:05 PM
Charles Murray was (unjustly, in my view) vilified over a single chapter in "The Bell Curve" about 20 years ago.
His larger point - that we have to figure out what to do with the inhabitants of the left hand side of the intelligence curve - has yet to be addressed by ANY of the inhabitants of the present-day political spectrum.
This is a problem that is not going to auto-correct or go away. Indeed, to the extent that "intelligence" (define it as you wish) is hereditable via genes and/or environment, it's only going to get worse.
Posted by: Tony Bergmann-Porter | 07/30/2014 at 07:28 PM
If I may interject something. Globalization is "raising all boats" but mainly those in emerging countries.
U.S. companies aren't as interested in labor cost overseas as they are with huge customer demand --- demand that is minimal in developed countries -- i.e. Europe, Japan and the U.S. And there are increasingly huge numbers of customers in emerging markets overseas and will continue to be for years.
No one talks about the gap in the percentage of employees companies have in the U.S. versus overseas. The gap is widening and it is not because of manufacturing.
Companies are hiring professional people overseas because they need people close to their customers --- sales, marketing, design engineering, tech support ---- and these jobs cannot be done from the U.S. I have had an opportunity to work with companies that have multiple design engineering centers overseas just to be close to customers that require their products be modified in some way.
It's not "outsourcing" that's the problem. The people increasingly hired overseas in professional jobs don't cause people in the U.S. to lose jobs. These are new jobs created because of a need in another country. If you care to read about it here is a link:
http://economix.blogs.nytimes.com/author/nancy-folbre/
The U.S. doesn't need millions of high level jobs --- in fact you need much fewer high level jobs than you need mid and lower level jobs. You need millions of people here as consumers. Consumers run our economy. And if there are no jobs you have no consumers. And if you have no consumers you don't need millions of people in STEM jobs creating things that no one can buy.
The continued encouragement of kids to go to college is tragic. There aren't jobs for them. Yet Kelly Services/Manpower have said for the past few years that companies are begging for skilled craftsmen. But all we hear about is STEM.
Economists say that this "new normal" and and the increasing use of technology will not lead to new, never imagined jobs as in the past. The jobs that automation replaced then were routine, repetitive jobs i.e. manufacturing. The technology we have today is replacing work that requires cognitive ability.
Read Jeremy Rifkin's "The End of Work". Yes it was written 20 years ago but it is scary how what he predicted is what we are experiencing now. Read Mohammed El-Erian's When Markets Collide. Read Michael Spence's The Next Convergence.
We do live in interesting times. Excuse me for the tangent but I have researched this extensively and it is a passion of mine.
Posted by: Jacque Vilet | 07/30/2014 at 08:57 PM
If I was able to choose at a fast food restaurant between punching in my order on a tablet or trying to communicate my order to a human that absolutely does not care one whit about service (and why should they given their wages and working conditions but that is a separate topic) I'd choose tablet any day. There is a mid casual restaurant here in town where you order right off the tablet wait staff only bring you the dishes and bus the tables. My kids are used to this (this also happens to be their favorite restaurant of course) and would accept this as normal behavior. Low end repetitive tasks will soon be handled by computers for the most part. Remember bank tellers...yeah me neither.
Posted by: Katherine Macrone | 07/31/2014 at 06:14 AM